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Flexible Deferred Gift Annuities
A Flexible (Deferred Payment) Gift Annuity means that the donor does NOT have to choose the payment starting date at the time of the contribution. The annuitant (who may or may not be the donor) may choose the payment starting date based on his/her retirement date or other considerations. The older the annuitant(s) when the payments start, the larger the payments will be.
This concept provides some of the flexibility offered by commercial annuities sold by commercial insurance companies, with the added bonus of a significant tax deduction. The donor would choose an initial target date for the payments to start. The College would then offer a range of payouts with differing fixed payment amounts and differing starting dates based on earlier or later years.
Since the charitable deduction remains fixed, the annuity rate for each starting date would have to change. The payments would be lower if the starting date was earlier and higher if the starting date was later. Each annuitant would have to determine on an annual basis whether or not they wish the annuity payments to start that year.
As with immediate payment Gift Annuities, a donor may write a Flexible Annuity with as little as $10,000.
Example: Jeff is 57. He is approaching retirement and would like to make a significant gift to Amherst College, but is concerned about building his retirement income. He is not sure when he will retire. As much as early retirement has its attractions, Jeff likes his work and may want to continue working past the typical retirement age. Jeff is also unsure of what will happen with retirement ages as they relate to Social Security, IRAs and 401(k) plans. He decides to establish a Flexible Gift Annuity with Amherst College with a gift of $100,000. The earliest Jeff thinks he might retire is when he is 62, while the latest he can envision working is 77.
At the time Jeff makes his gift, he qualifies for an income tax charitable deduction of $17,630 based on the earliest date at which he can request payments to begin, at 62. The actual payments he receives will depend on when Jeff decides to begin the payments. His choices are represented in the table below.
Information contained in this website should not be considered legal, accounting, or other professional advice. Individuals considering a planned gift to Amherst should consult with their financial advisor. Examples are for illustration purposes only.